RenoFico wrote:
and lo and behold her APR jumped to 24.99% from 10.49%.
She had to opt-out to get her APR down but was told to call back in a couple months and reopen the account and she’d probably get an adjustment then.
We're batting .500, I told my wife we'll call back in a month or so before her card expires.
It is all part of the new rate reprising structure necessitated by the so called reform laws. There is no guarantee that an adjustment will be forth coming. The new law prohibits banks from raising the interest rates on existing balances.
It is my opinion that your wife's account now has a permanent rate of 24.99%. There is no reason for the bank to lower the rate since it won't be able to raise the rate after the new law goes into effect.
I have predicted that the banks will be willing to reopen many closed (opped out) accounts at the new rate. In your wife's case that is 24.99% The bank might however be willing to reopen the account with a limited term "promo rate" of somewhere between 10.49% and 24.99%.
I am pretty sure that the interest rates that we will be charged in the future will be mostly a series of temporary promo rates. So much for not being able to change the interest rate on current balances.
The really bad news is that I don't think that your (decreased) "permanent rate" will stay the same. i am pretty sure that your rate will be raised again before the new law goes into effect.
It is my belief that the only self defense strategy available to cope with the pain that the new law is already causing, is to pay down as much debt as possible before the law goes into effect.
People who have carried credit card debt for any prolonged period of time will most likely find themselves with terms similar to store cards. There will be high permanent interest rates, low credit limits, and frequent temporary lower interest rate offers.
The stipulation in the new law that banks can't change interest rates on existing balances is meaningless. The rates are going to be raised higher than they ever were under the old pricing system. The rates could conceivably be jacked up to 50% or higher with a generous temporary rate offer of 24% for 9 months on existing balances.
There will then be an outcry to "reform" the reform law. The special interest consumer groups responsible for the law will then be demanding that the "loopholes" in the law should be plugged.
Your sig says:
Credit is okay but CASH IS KING!
I fully agree. Having the cash to pay off balances and subsequently paying in full is the best way to avoid the pain of permanent high interest rates on credit cards.
Credit cards used to be a means of temporarily delaying payment for purchases. The cards would usually get PIFed in a couple of months or so. The interest rates were rather high and people couldn't justify paying the extra money for every day purchases.
Those cards were simply being used as a temporary substitute for cash. Now that interest rates for revolving balances will be higher than ever many people will return to paying in full every month.
If a person does not revolve balances, in the future, he will probably have ongoing temporary (short term) low interest rate offers available.
I personally will have no problem with that state of affairs. Credit cards will again be used for convenience and short term revolving debt.
The people who cannot pay off their credit card debt in a timely manner will be forced into BK and the credit card system will still function just fine.
Cash is still King.
